Oil near $102 as US nears short-term budget fix

Oil retreated to below $102 a barrel Friday as political leaders in Washington neared an agreement that would allow a short-term extension to the U.S. borrowing limit and as global oil supplies were seen rising next year.

By early afternoon in Europe, benchmark crude for November delivery was down $1.25 to $101.76 a barrel in electronic trading on the New York Mercantile Exchange.

The price of oil has swung back and forth for days as concerns over the seriousness of the U.S. budget impasse have waxed and waned. It dropped $1.40 on Thursday and rose by $1.88 on Wednesday.

The White House says President Barack Obama would “likely sign” a short-term extension of the debt ceiling, even if it left the partial government shutdown intact.

Failure to raise the borrowing limit could result in a U.S. default on government bond interest payments, undermining the credibility of assets prized as collateral by banks worldwide and crucial to the functioning of the financial system.

House Speaker John Boehner is talking to Republican rank and file about leaving the shutdown in place while raising the debt limit and setting up negotiations with the president over spending cuts and other issues.

The Paris-based IEA said that the United States would overtake Russia next year as the largest non-OPEC producer of liquid fuels, a category that includes other fuels on top of crude oil.

“Non-OPEC supply growth is now projected at an average 1.7 million barrels a day for 2014,” the IEA said. “This would be the highest annual growth since the 1970s. The US’s place in the driver’s seat of growth is also a throwback to decades past.”

The IEA also minimally increased its forecast for crude demand growth in 2014 by 90,000 barrels a day to 92.1 million barrels a day.

Brent, the benchmark for international crudes, was down 26 cents to $111.54 a barrel on the ICE Futures exchange in London.